Federal Reserve Governor Lael Brainard has delivered one of the most detailed critiques of cryptocurrencies to date.

She tempered her criticisms by acknowledging the underlying potential of the technology.

Tuesday saw Federal Reserve Governor Lael Brainard deliver one of the central bank’s most detailed critiques of cryptocurrency to date. Speaking on the subject, Ms Brainard not only dismissed any possibility of the Fed entering the market, but also cautioned that digital coins pose “serious” challenges.

“There is no compelling demonstrated need for a Fed-issued digital currency. Although central bank digital currencies may be able to overcome some of the particular vulnerabilities that cryptocurrencies face, they too have significant challenges related to cybersecurity, money laundering, and the retail financial system.”

Lael Brainard

Ms Brainard’s criticisms of cryptos ran along what are now increasingly familiar lines, though the content contained within was noticeably lengthy and detailed. However, she is not the only one who has been vocal on the subject of late - with St Louis Fed President James Bullard also offering a critique of digital currencies at a conference on Monday.

A key objection raised by Ms Brainard was the volatility of currencies like bitcoin, which she suggested had limited utility as a result. She further implied that cryptocurrencies can encourage money laundering by merely existing, as they make it so easy for would-be criminals.

She explained:

“Cryptocurrencies are strikingly innovative, but also pose challenges associated with speculative dynamics, investor and consumer protections, and money-laundering risks.”

Lael Brainard

Brainard did temper her criticism to an extent, by acknowledging the potential of the underlying technology to streamline payments. She further commented on their possible - albeit narrow - application for bank-to-bank transactions, as well as some payments in the financial markets.

Taken as a whole, the comments made by the federal reserve governor make the central bank’s current stance on digital currencies unquestionably clear: that they do not yet believe they are either ready nor ripe for consumer adoption.

As Ms Brainard cautioned:

“In addition to losses, individual investors should be careful to understand the potential for other risks.”